Huize Holding Limited

Ladies and gentlemen, thank you for standing by and welcome to the Hoytze's second half and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. After the management's prepared remarks, we will have a question and answer session. Today's conference call is being recorded and the webcast replay will be available on Hoytze's IR website at ir.hoytze.com under the events and webcasts section. I'd now like to hand the conference over to your speaker host today, Mr. Kenny Lau, Hoytus Investor Relations Director. Please go ahead, Kenny.

Thank you, operator. Hello, everyone, and welcome to our second half and third year 2025 earnings conference call. Our financial and operational results were released earlier today and are currently now available on both our IR website and Globe Newswire services. Before we continue, I'd like to refer you to a safe harbor statement in our earnings press release. which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more properly explained in our earnings release and filings with ERDC. Joining us today are our founder and CEO, Mr. Chen Jun Ma, co-CEO, Mr. Ming Han Xiao, and co-CEO, Mr. Ron Tan. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, both by Mr. Tan, who will go over our financial results for the year 2025. Then we'll open the call for questions. Now I'll turn the call over to Mr. Ma.

Hello, everyone. Welcome to the next half of the year and the year-round performance conference. In 2025, China's insurance industry has undergone profound structural changes. With the continued decline in bank deposits, the financial distribution logic of residents has undergone a fundamental change. The capital is accelerating the transfer of long-term stable assets such as insurance. Dividend insurance, with its double property that guarantees and increases value, is the core element that drives the growth of the industry. At the technological level, the technology of the production room IR and the IR intelligent body is rapidly taking over. It is deepening the insurance industry and the mode of life, ecology and operation, pushing the industry towards a more intelligent and efficient direction. Welcome to the second half and full year of 2025 earnings conference call.

In 2005, China's insurance industry underwent profound structural changes. As bank deposit rates continued to decline, household wealth allocation shifts fundamentally, with capital accelerating to long-term stable assets such as insurance. Participating products that offer both protection and wealth accumulation emerged as a core growth engine for the industry. Furthermore, the rapid growth of generative AI and AI agent capabilities is deeply shaping the industry ecosystem and operating models, driving the sector towards greater efficiency and intelligence. Internationally, Southeast Asia insurance markets are expecting accelerating digital penetration and a growing middle class, creating compelling structural opportunities. Our proactive forward-looking strategy ideally positioned us to capitalize on this dynamic

and deliver a strong performance in 2025. Both GWP and FYP facilitated on our platform in 2025 reached record highs,

of RMB 7.4 billion and RMB 4.6 billion, searching 21% and 35% year-over-year respectively. Total revenue for the year came in at RMB 1.6 billion, growing approximately 27% from last year. Driven by strong top-line growth, cost efficiency improvement from the strategic deployment of AI solutions across our We delivered non-GAAP net profit of RMB 22.6 million. This marks the first consecutive year of non-GAAP profitability, a testament to our resilience execution in a dynamic market and the long-term sustainability of our business model.

规则始终秉持,以客户为中心的核心战略。 to provide full-life insurance services to high-growing customers. In 2025, the platform will add about 1.67 million users to Tobao. By the end of the year, the total number of Tobao users will exceed 12 million. In 2025, the average age of long-term Tobao users will be 35.3 years old. The percentage of users in the second and above cities is 65.8%. The image of a high-quality customer group In the first year of the warranty period, in 2025, the long-term line of construction and military warranty reached 7,900 yuan, which increased by 38%. By the end of December, the long-term line of the 13-month and the 25-month annual cumulative continuation rate will continue to be higher than 95%, which is the leading standard of the stable housing industry, fully verifying the quality of service and product competitiveness of customers.

We remain deeply committed to our customer-centric strategy, serving our high-quality customer base across the full insurance lifecycle. In 2025, we added approximately 1.7 million new customers, bringing the total to over 12 million by year-end. The average age of long-term insurance policyholders was 35.3 years, with 65.8% residing in Tier 2 cities or above. reflecting our focus on high-quality customer demographic segments. The average FYP ticket size for long-term insurance approximately RMB 7,900 in 2025, a 38% increase year-over-year. As of year-end, each of our 15th and 25th month persistency ratios for long-term insurance products remained at industry-leading levels, of over 95%, highlighting our strong retention capabilities and fully validating the quality of our service and the competitiveness of our product offerings.

At the end of the year, we will continue to expand the cooperation ecosystem to establish and maintain a stable cooperation relationship with 158 insurance companies, continue to innovate and launch diversified and customized insurance products, In response to the growing demand for high-quality financial planning in the context of the aging population, we have proposed that everyone will choose No. 2, a dividend-based pension, only to provide an advantageous multi-dimensional retirement planning plan to actively integrate the market's strong demand for dividend-based insurance. In addition, we have also systematically proposed two products worth 1 million yuan, Xinxiangshou No. 2 and Changxiangan No. 3, each with a 20-year guarantee. By year-end, our partner ecosystem grew to 158 insured partners, allowing us to continue expanding the differentiated customized products we offer.

To address the growing demand for wealth management and financial planning solutions in an ageing society, we launched Dajia Hui Xuan 2.0, a participating annuity product designed to provide premium diversified retirement planning solutions. We also launched two customized million yuan medical insurance products, Xin Xiang Xiu 2.0 and Chang Xiang An 3.0. Each offering differentiated features including 20-year guaranteed renewal and simplified health underwriting that cater to the diverse health protection needs of different customer segments. Together, these launches reinforce our core competitiveness in the medical insurance segment and lay a solid foundation for our long-term sustainable growth.

In 2015, we fully implemented the training of AR native culture. will be deeply integrated into the insurance service value chain, helping to promote the 5.9% to 26.3% of the annual total cost and income ratio. At the same time, we will extend the IR capability to the entire user service chain, covering customer intention recognition, product recommendation, health insurance and base payment, and realize intelligent service experience. In 2025, AI drives the new user's self-sufficiency rate, which has increased by 50%. At the same time, we have launched AI that has been able to independently complete sales transformation. In addition, the introduction of the AI planning room is exactly this transformation. AI can directly generate personalized family insurance plans based on the image of the user, and assist Hui Ze to become a financial planning partner for the entire life cycle of the user. Recently, Hui Ze officially released the online AI The smart body of its AR shield has completed a comprehensive connection with the core shielding system. The shielding case, which was tested by AR, was successfully solved in just 23 minutes and became the first in the insurance intermediary industry to complete the shielding practice completed by the AR smart body. Successfully realized the service solution of the whole chain. In the future, Gui will co-construct and connect the smart body of the insurance company with the agent.

We began fostering an AI-native culture across the organization during the year, deploying AI solutions across the insurance service value chain. This significantly improved our expense-to-revenue ratio, which fell 5.9 percentage points year-over-year to 26.3%. and was a key contributor to our return to full-year profitability. We also deployed our AI solutions across the entire customer journey, covering intent recognition, product recommendations, and writing claims. This meaningfully enhanced the user experience and supported a 50% year-over-year increase in AI-driven self-service policy purchases among new users in 2025. Our AI systems are now capable of independently completing sales conversion. The launch of our AI financial planner highlights this evolution into a full lifecycle financial planning partner for our customers. AI cannot directly generate personalized family insurance plans directly from individual users' profiles. More recently, we launched our AI claims service with our AI agent fully embedded across core claim systems. The first AI-reviewed claims were settled in just 23 minutes and marks the first fully end-to-end AI agent-driven claim settlement in China's insurance intermediary sector and the completion of our intelligent closed-loop service capability. Looking ahead, we will collaborate with insurance carriers to build an intelligent, connected ecosystem spanning users, insurers, and agents Embedding AI across every stage of insurance services and financial planning to fully realize our vision of an AI-driven insurance platform.

In 2025, the international business of the company continued to show bright performance. In Singapore, as the headquarters of PolyInstitute, the company has successfully acquired the financial advisor and insurance economic license issued by the Singapore Financial Management Bureau, and officially opened the local business layout. At the same time, we actively promote the overseas export of internal technology applications, and expand the Singapore market in an innovative way to provide consumers with a new experience of insurance selection. In the Hong Kong market, the market continues to be strong in the demand for Hong Kong insurance products with the help of differentiated insurance product functions. Hong Kong business has made significant growth in 2025, and business performance has increased by more than twice the same. GlobalCare's annual total insurance fee has increased by 106% and revenue has increased by 84%. It is worth noting that GoSell's business line has achieved a breakthrough growth. The number of platform users has increased by 4 times a year, and the total insurance fee has increased by more than 3 times. This fully verifies the scale of our digital distribution model in the Southeast Asian market.

Our international business continues to deliver a strong performance. In Singapore, headquarters of Pony Intertech, we obtained a financial advisor and exempt insurance license from the Monetary Authority of Singapore, formally establishing our local operational footprint. Simultaneously, we are actively expanding our proprietary AI solutions to Singapore to offer an innovative and differentiated insurance experience. Demand for our insurance products in Hong Kong remained robust in 2025, with revenue increasing more than two-fold year-over-year, driven by their differentiated product features. In Vietnam, Global Care generated a 106% year-over-year increase in four-year GWP and an 84% increase in revenue growth. Notably, the GSL business line has a standout performance, with platform users quadrupling drilling the year and premiums growing more than three-folded year-over-year, strongly validating the scalability of our digital distribution model in Southeast Asia.

Looking forward to the future, HuiZhe will continue to focus on three strategic directions to promote the company's high-quality development. First, to deepen the service quality with AR comprehensive support, continue to provide customers with the best insurance service experience, optimize the workflow of each section through AR, will return the resources released to improve service quality and expand more AR application scenarios, so that technology can really serve people. Second, deepening product innovation, focusing on core channels, continuously customizing and creating innovative and participatory insurance products, accurately satisfying the diverse needs of the detailed customer group, continuously issuing products that are risky and long-term healthy, and updating them to build and cover all areas of healthcare and wealth management for customers, Looking ahead, we will continue to focus on three strategic priorities to drive high-quality growth.

First, we will continue to deploy AI pros. to deepen service quality and improve user experience. By using AI to streamline workflows, we will deploy freed up resources to further improving service quality and expanding AI application scenarios, facilitating technology and creating real value for our customers. Second, we will deepen product innovation in our core growth areas. developing differentiated and innovative products tailored to specific customer segments. Our focus will remain on participating products in long-term health insurance to address demand for comprehensive coverage across both health care and wealth management. Third, we will accelerate and deepen our international expansion through home industry tech, growing the proportion of overseas revenue contribution and delivering sustainable long-term value for our shareholders.

This concludes my prepared remarks for today.

I will now turn the call to our CFO, Mr. Ron Tang, who will provide an overview of our key financial highlights.

Thank you, Mr. Ma and Kenny. Good evening, everyone. First of all, we closed out the year very strongly with another solid performance despite a volatile macroeconomic and geopolitical landscape. On a full-year basis, both gross return premiums and first-year premiums facilitated on our platform has reached record highs of RMB 7.4 billion and RMB 4.6 billion, respectively, representing year-over-year increases of 21% and 35%, while total revenue grew 27% year-over-year to RMB 1.6 billion. We gained profitability with net profit of 4 million RMB and non-GET net profit of RMB 23 million. Our financial position remained solid with cash and cash equivalents of RMB 251 million as of the year end. This exceptional performance was driven by our omni-channel distribution network, expanding high-quality customer base, and efficiency gains from the strategic deployment of our advanced proprietary AI solutions. underpinned by continued progress in the execution of our international expansion strategy. Looking at our core business, long-term insurance products continue to be our strategic focus, which accounts for over 90% of our total GWP in 2025. FYP from our long-term savings products surged 48% year-over-year to RMB $3.5 billion in 2025. Notably, FYP for annuity products more than doubled year-over-year to RMB 1 billion, which is driven by robust demand for wealth management and financial planning solutions in a lowering interest rate environment in China. We have capitalized on national strategic guidance to build a multi-tiered healthcare protection system and the release of national commercial insurance innovative drug catalog, with the long-term comprehensive health protection needs of mid- to high-income families. By leveraging our well-established omni-channel distribution network and advanced AI solutions, we have significantly enhanced customer acquisition and engagement. Our total customer base has reached 12.3 million as of December 31, 2025. reflecting an increase of approximately 1.7 million customers over the full year. The repurchase ratio for our long-term insurance products remained solid at 36%, highlighting our ability to grow customer lifetime value through effective upselling and cross-selling. I would like to highlight several key operational achievements for the year that further demonstrate this progress. The FYP from our IFA business has increased by 44% sequentially to RMB $215 million in the second half of 2025, reflecting the impact our AI solutions are having in enhancing the productivity of both our internal and independent financial advisors. FYP from our short-term health and accident insurance grew 12% year-over-year to RMB $613 million, demonstrating our ability to innovate and deliver an increasingly diverse range of product offerings. As of December 31st, 2025, our 13th and 25th month persistency ratios for long-term life and health insurance has remained at industry-leading levels of over 95%, underscoring the strong customer loyalty we attract with these diverse product offerings and the effectiveness of a post-sales servicing. The average ticket size of a long-term savings product rose 37% year over year, to RMB 103,000 in 2025, driven in part by the increased sales of premium products internationally. In 2025, we have implemented our systematic three pillar AI strategy to enhance internal operational efficiency, to improve customer experience and to drive platform transformation. Internally, we are fostering an AI native culture across the organization. deploying AI solutions tailored to various business units that automate routine tasks and optimize workflows. On the customer front, we have upgraded our AI app with multi-agent architecture that facilitates integrated end-to-end user journeys with product recommendations, insurance underwriting, and policy servicing. Additionally, we also unlocked new revenue opportunities through AI-driven product and service innovations For instance, our AI financial planner is capable of designing tailored family insurance solutions based on client-specific information. Collectively, these AI solutions have delivered meaningful cost savings and productivity gains. Our total operating expenses increased at a slower pace than revenue, rising by just 3.4% year-over-year to RMB $415 million. And consequently, our expense-to-income ratio improved significantly by 5.9 percentage points year-over-year to 26.3% for the full year of 2025. Furthermore, our AI-driven self-directed policy purchases grew by 50% year-over-year in 2025, underscoring the effectiveness of our AI agents. Pony Intratech, our international arm, delivered another strong performance and remains a key pillar of a long-term growth strategy. In Vietnam, our maturity-owned subsidiary, Global Care, achieved impressive growth, with the number of insurance policies issued increasing by 31% year-over-year, driving a surge of 106% and 84% year-over-year growth in GWP and revenue, respectively. Our IFA business in Vietnam had a particularly standout year with a number of active platform users quadrupling and policies issued going by 2.3 fold year over year in 2025. While GWP and revenue from this channel also grew significantly over 3.8 times and 2.5 times respectively. GlobalCare also onboarded new merchant partners and launched Vietnam's first insurance influencer platform in July. a proven distribution model that's pioneered by Quasar in China, further extending our digital reach in the local market. In Singapore, we obtained approval from the MAS to operate as a financial advisory and exempt insurance broker, marking a significant milestone in our regional expansion. This license reinforces our dual regional hub strategy across Singapore and Hong Kong, positioning us to attract cross-border assets and deliver premier protection and wealth management solutions to consumers across Asia. Collectively, the continued expansion of Pony InsurTech will diversify our revenue streams and create new growth drivers, enhancing long-term shareholder value for Huize. In conclusion, we are confident in our ability to capitalize on the opportunities arising from China's evolving industry landscape and the broader Asian market. Domestically, prevailing low time deposit rates are expected to continue to encourage retail depositors to reallocate the wealth towards higher-yield savings and participating insurance products. In parallel, aligned with the National Strategic Directive to establish a multi-tiered protection system, demand for long-term commercial insurance protection for health is expected to grow steadily, underpinning healthy and sustainable development across the entire value chain. Internationally, through Pony Interdeck, we are replicating our proven model in China and proprietary AI solutions to drive our expansion into high-growth Southeast Asian markets, with a particular focus on the young and fast-growing middle-class demographic in the region. We remain steadfastly committed to strengthening our positioning as Asia's leading intratech platform by harnessing our advanced data analytics, fully integrated AI solutions, and proven market penetration strategy. Our vision remains focused on building an AI-driven intelligence ecosystem that seamlessly connects consumers, our carrier partners, and distribution partners while consistently delivering and doing value to all stakeholders. And with that, we will conclude the opening remarks and open up the call to questions. Thank you very much and over to you, operator.

Thank you so much. Dear participants, if you would like to ask a question, please press star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star, 1 and 1 again. Please stand by, we'll compile the Q&A roster. This will take a few moments. Once again, if you would like to ask a question, please press star, 1, 1. And now we're going to take our first question. And it comes line of Kelly Lim from UOBK here. Your line is open, please ask a question.

Good evening, Ron. First of all, congratulations on a strong result. So, a few couple of questions for my end. First, your OPEX was well-contained, but I noticed that the operating costs grew faster than the revenue. So, could you give us more color on this and how are you going to improve this? And second question will be, We know that the few regulatory schedules in Hong Kong, like the broker referral fee cap and also the commercial spreading are taking effect this year. So what is the plan to sustain your pro-momentum in Hong Kong? These two questions are my end.

Thanks. Okay, great. Thank you, Jenny, for your two questions. On the first question regarding the observation on the operating costs going faster than revenue growth, I think in effect that would mean that there's a depressed gross margin year over year. The main reason for this has to do with the makeup of our revenue for the domestic market and also the international markets. The domestic market revenue contribution has declined because of the high growth. of our international revenues and our international revenue segment has a slightly lower gross margin and therefore, but that is the observation that you've made that the operating cost has, you know, the growth of that has surpassed revenue growth and that has to do with the make-up of the revenue as I just explained. So that's the first question. We do expect that the gross margin or offering margin to remain at this level, and we do expect slight improvement over the course of this year. Your second question on the Hong Kong market, with regards to the regulatory cap on the referral fees and also on the commission spreading that has been in effect since the 1st of this year, 1st of January of this year, we do expect, and which has been uh seen in the market that there's been a dampening effect on the growth momentum of the overall brokerage market channel uh in in hong kong specifically coming from the mcp segment which obviously i think most of the china-based uh you know both brokers are focused on um but however we do we do note that the underlying uh growth drivers for customers to seek out offshore product in Hong Kong remains very robust. And the momentum has not decreased year over year. We do see that with the, you know, substantive maturity of time deposits in the onshore market, which is to the tune of, you know, for very last time, putting that at around 3 to 5 trillion RMB And a meaningful proportion of this could be allocated to offshore markets, and Hong Kong would definitely be a natural recipient of this also. And therefore, the underpinning growth momentum should remain relatively robust for the Hong Kong savings plan, which is the main, you know, product that are being distributed by brokers in Hong Kong. With that, we do believe that we would expect that strong growth momentum would persist for Hong Kong business in 2026.

So back to the operator.

Connie, any further questions?

Thank you so much.

Dear participants, as a reminder, if you would like to ask a question, please press star, one, one, on your telephone keypad. And now we're going to take our next, just give us a moment. And now we're going to take our next question. And the question comes from Mona Wang from Greenwich Global. Your line is open. Please ask your question.

Hello, everyone. This is Mona from GreenWidth Global. And it's great to see the company delivering several positive developments recently. And there are two questions. The one question, there was some growth margin compression in the first half of 2025 as compared to the same period in 2024 when looking at brokerage income against the cost of revenue. So except the AI, is there opportunity or not opportunity for the margin expansion? And the second question, you saw strong the top line growth and the strong back to a profitability in 2025. but the stock still below cash value. So why do you think the stock is not moving with the fundamentals? Thank you.

Great. Thank you for the questions, Mona, and thanks for joining us for the first time. Appreciate your attendance. With respect to your two questions, I believe the first question was about the compression of gross margin as it compressed across 2025 and 2024, and whether AI could have a positive effect on improving gross margins. So I think two fronts here. I think as I explained to Kenny just now in his first question, The gross margin depression in 2025 has to do with the makeup of our revenue and specifically the contribution of our international revenues to the overall revenue pool, which has increased substantially over the course of 2025. And as a result, the gross margin has decreased because the international revenue carries a low margin as compared and China revenue segment. So therefore, as a result of the two, the gross margin has been decreased. However, as you know very accurately, with the deployment of AI solutions and the initial result that we are seeing, obviously AI deployment has a significant cost savings or productivity efficiency improvement in the business flow in the mid to back office. As you can see, the expense ratio has improved by almost 6%. And that's more to do with the expense or cost savings point of view. But on a growth model level, I think that what we can potentially envisage over the course of the next few years as AI continues to be deployed in the front line, i.e. in terms of customer acquisitions, we do believe that there could be a potential for a significant re-rating or upgrade of our gross margin going forward. For example, we have noted in our opening remarks that AI has been driving a 50% year-over-year increase in self-service policy purchases by our customers in 2025. Our AI systems are capable of independently completing sales conversions And we have been generating over millions of RMB of premiums already through the AI engines. So this, obviously, we do have the hopes and high expectations that AI will continue to drive and scale our revenue generating capabilities to the tune that we don't need any human interaction or involvement in the entire customer acquisition and conversion process. So I think that's something that we are continuing to work hard towards, and that probably is the holy grail in terms of how AI can scale our profitability over the foreseeable future. So that's something that we have already proven to the market, and we will continue to invest in AI-driven growth in 2026. With respect to your second question about the fundamentals somehow is not tying with our share price performance. We do note that the market has been relatively pessimistic, I believe, on the performance of our company. It may have to do with the switch of our reporting schedule. Since the second half last year, we have migrated to a half-yearly announcement schedule. And therefore, the market may have certain concerns on the continued sustainable growth and performance of the company. But as we have shown in this earnings release, we have delivered strong growth. not in terms of just top line or premium growth, but also in terms of bottom line profitability. We have demonstrated that we are able to, you know, operate a very resilient business model. And with the advances in AI and our strong investment in AI-related proprietary products, you know, across our business value chain, both in the front end, we do expect that altogether we are looking at a very much of a robust growth momentum in 2026. So that would hopefully drive our re-rating in our share price, as you have noted that our share price right now is trading even below our net asset value, and therefore there's significant room for us to re-rate our share price to the more of an intrinsic value. And thanks for your question, Mark. Thank you.

Thank you. Thank you. Dear speakers, we will just give a moment for our participants to press star 1 1 if they have any additional questions. Once again, if you would like to ask a question, please press star 1 1. There are no further questions for today. I would now like to hand the conference over to your speaker, Mr. Kenny Lowe, Hoytis IR Director, for any closing remarks.

Thank you, Obrada. In closing, on behalf of OIT's management team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.